Hulu Bids Goodbye to Its Free Service: Hello Subscription-Only Model

By Erika Malzberg • August 9, 2016

Hulu is phasing out its free, ad-supported service to focus exclusively on its subscription-only model as it battles Netflix for supremacy in streaming.

According to a recent report by Advanced Television, 55% of OTT services are subscription-only. If you needed a greater proof point that there is a marked OTT streaming shift from AVOD to SVOD, you need look no further than Hulu’s recent announcement to bid goodbye to its free service and instead focus on a subscription model in order to provide the best experience for their customers.

“Our limited free offering simply isn’t aligned with our focus on creating the best experience possible and delivering the best content we can to Hulu subscribers,” said Hulu Senior Vice President and Head of Experience Ben Smith.

“This move “shows how far Hulu has evolved from its origins. The company launched in 2007 as a free, ad-supported service carrying full-length episodes of recently-aired broadcast TV shows, in a bid by its media company owners to battle digital piracy and offer an alternative to YouTube.”

“It launched its subscription tier in 2010 and then began offering a higher-priced ad-free service last year.” And now Hulu is reportedly in conversation with TV channels to create a virtual cable TV service, scheduled to launch sometime next year.

A new forecast by research firm Digital TV Research pegs worldwide OTT video revenue to reach $51 billion in 2020. This is clearly a huge opportunity for businesses like Hulu if they can get it right by focusing on their customers and fostering strong customer relationships.